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KA2e_SelfStudy_Ch04

KA2e_SelfStudy_Ch04 - File:ch04,Chapter4: MultipleChoice 1....

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File: ch04, Chapter 4: Accrual Accounting Concepts Multiple Choice 1. What is the time period assumption? a) Companies should recognize revenue in the accounting period in which it is earned. b) Companies should match expenses with revenues. c) The economic life of a business can be divided into artificial time periods. d) The fiscal year should correspond with the calendar year. Ans: c Response A: This statement describes the revenue recognition principle, not the time period assumption Response B: This statement describes the matching principle, not the time period assumption. Response C: Correct! Response D: The time period assumption states that the life of a business can be divided into artificial time periods, not that the fiscal year and calendar year must coincide. 2. Which principle dictates that efforts (expenses) be recorded with accomplishments (revenues)? 3. Adjusting entries are made to ensure that:
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